An economy of purpose and resilience

Until we win the war of ideas, the policies will fail

Labour’s recent travails over the fiscal charter were a ‘Groundhog Day’ moment. Back in July we fell right into George Osborne’s traps around the welfare bill; fast-forward three months and there we were again, disappearing down another hole that had been dug by the chancellor, only this time right beneath the fiscal charter.

On both occasions Osborne successfully exploited the fact that the Labour party is lacking a cohesive alternative economic strategy, and every day that goes by without clarity offers the chancellor an opportunity to continue to play his games. The debacles of the welfare bill and the fiscal charter have taught us, in no uncertain terms, that cohesion is a pre-condition for credibility.

In my recently published pamphlet, A New Nation: Building a United Kingdom of Purpose, Patriotism and Resilience, I argue that if Labour is to formulate a compelling narrative and a credible set of policies on the economy, we must first and foremost remind the British people that we are rooted in the here and now. Our understanding of modernity runs in our veins, and our tireless drive for reform is in our DNA. We must demonstrate through our words and actions that we get it: we know that globalisation, deindustrialisation, automation and the technology revolution have fundamentally changed the way in which people live, and how they perceive their lives; devolution has loosened the constitutional ties that bind, and our cultural tastes and habits have been atomised.

With our credentials as a modern political movement firmly re-established, the next step must be to win the battle of ideas about what the economy is actually for: what is the overarching purpose of the wealth that we generate, and of the taxes that we pay? To win this battle we must set out our vision for the reinvention of the British economy on the basis of the following seven core principles. First, productivity, based on high levels of public and private investment in innovation, skills and infrastructure, thus ensuring competitiveness at home and abroad. Second, security. People who work should earn enough to feel secure, to care for their future, and to invest in their family. Third, dignity. Skills provide pride. Work provides worth. Fourth, ambition. Nelson Mandela once said: ‘there is no passion in living a life less than the one you are capable of living’. Fifth, partnership. Labour must work closely with business, trade unions and civil society to build an alternative economic strategy that combines fiscal responsibility and economic dynamism with social cohesion. Sixth, fairness. It is right that we oppose the Tories’ ideologically driven obsession with shrinking the state, but we must also set out a clear welfare reform agenda based on a return to Beveridge and the contributory principle. Seventh, sustainability. We must learn to grow our economy in such a way as to ensure that it works in harmony with our tightly constrained natural resources.

The third stage in our return to credibility must be to win broad support for our view that the seven principles described above are what form the foundations of a successful economy, and if you build those right then all the other key performance indicators (from the balance of payments, to productivity, to the deficit) will fall naturally into line.

The fourth and final step should be to point out that by focusing exclusively on deficit reduction through austerity the Tories are ignoring the fact that the economy is built on faulty foundations, and therefore lacking the sense of purpose and resilience that are so important in this age of uncertainty. Tory failure to tackle these fundamentals presents Labour with a golden opportunity to return to our radical reforming roots, and to demonstrate that we are the only political party that has the desire and capability to fix the structural weaknesses at the heart of the British economy.

However, we are facing a daunting challenge, which is that when we talk about the economy these days virtually nobody is listening – we have lost the right to be heard because the Tories and their cheerleaders in the media have so successfully framed Labour as lacking competence. The primary focus of everything that we say and do over the coming months must therefore be to take the debate back to first principles, for the fact is that, until we have won the war of ideas, we will continue to lose the battles and skirmishes of policy. We will keep on constructing all manner of robust arguments against the ‘two child’ policy or tax credit cuts, for example, but those arguments will be built on sand; we will shout at Osborne, David Cameron and the rest of them until we are blue in the face, but we will not cut through.

Great swaths of the electorate do not vote for a political party on the basis of what it does, or how it does it, they vote on the basis of what it seems to stand for, and the extent to which it is aligned with their values, hopes and expectations. This is why broad instinct plays a far more important role than detailed analysis in determining the decisions that people take at the ballot box, and why the weakness at the heart of Labour’s outlook for too long now has been our inability to reflect, connect with and shape the instincts of the British people.

We know that left-of-centre parties only ever win power when their approach is founded on a sense of renewal, change and optimism, combined with a resolute commitment to reform and modernisation. For the Labour party to have a credible shot at returning to government in 2020 we must, therefore, be prepared to talk less about what we are against, and more about what we are for, and we must base our arguments on the reality of life in modern Britain. We must make clear that in a networked society statist solutions are rarely the optimal ones; that the purpose of taxation is to promote solidarity, incentivise hard work and foster entrepreneurialism, not to punish the rich; that technology is an opportunity, not a threat; that government can and must develop an active industrial strategy if we are to rebalance the British economy through a manufacturing renaissance; that the primary function of the state is not to micromanage the market, but rather to build a competitive framework that keeps market failure to a minimum.

The story of the British economy today is a story of low productivity, ballooning personal debt, a yawning trade deficit, creaking infrastructure, dangerous over-reliance on financial services, and a chasm opening up between London and the rest of the country. Labour can and must tell an alternative story. But if we want people to listen then we will need to change our tone and vocabulary, for the old mantras are not cutting through. We need to be less abstract, and more directional.

Perhaps we could start by inspiring the electorate through our sense of purpose, and reassuring them through our commitment to resilience?